Spreading Tax Around the Family Continued

June 24, 2011 by  Filed under: Taxes 


Husband, wife and civil partners:

The gains of each spouse or civil partner are calculated separately. Each is entitled to the annual allowance of £10,600 for 2011/2012. The losses of one spouse or civil partner cannot be set against the gains of the other. Transfers between spouses or civil partners are treated as giving rise to neither gain nor loss.

Bed & breakfast:

You may want to bed and breakfast your investments at the end of the year in order to wipe out some of the accrued gain. There is legislation that prevents this but there is nothing that stops you bed and breakfasting with your spouse or civil partner.

You sell and your spouse or civil partner buys thus keeping the holding in the family but having removed part of the taxable gain. It appears from a guidance note issued by HMRC that they find the sale of an asset standing at a loss and with the other spouse or civil partner repurchasing it to be unacceptable so take care and seek professional advice.


When your children go to work away or to University they should have their own property even if you are called upon to stand as guarantee.

Purchase the property in your child’s name and then they can receive the rent if they let out rooms to their friends, which should offset a high proportion of the mortgage repayments. Also consider whether rent a room relief is due.

Family Strategy:

During the average lifetime of a family it should be possible to utilise the exemption for the principle private residence on at least four occasions.

To adopt this strategy thought must be given to the lifetime occupation of your properties. When you buy your first home you must give the next home thought, e.g. at that time you will have a family and school days loom. So before you buy house B you must know which school the child is to attend. Then you buy your first home A a long way from B. So you have a good reason for the sale of A to purchase B. Similarly before B is purchased you need to know which secondary school the child is to attend. Make that a distance from property B so you have to move when the child graduates to secondary education.

There is a section in the act which denies relief if the object of purchase is to make a gain from the sale. This is difficult for HMRC to police as I suggest that everybody on the purchase of their residence has a profit from the sale in mind. If you have a series of moves it makes it easier for HMRC to challenge. Thus, with this strategy there must be a motive for each move and then there should be no problem. Back to the strategy; the final house will be for the child going to university. See the previous item.

Peter Clare

The Poacher turned Gamekeeper


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This information has been honesty written with a view to helping you: I am, like most people, not perfect and I apologise for any in corrections. I cannot be held responsible for any consequences of you using the information unless I have been made aware of the full facts of the matter and have expressed an opinion thereon.

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